The Relationship between Technological Innovation, Activity Based Costing and Business Size

Size is one of the most controversial influencing factors in the diffusion literature. Some authors argue that large firms have several advantages over smaller firms in the adoption of an innovation (Brown 1981), while others argue that diffusion of innovation in small firms is quicker than in large firms because of the advantages associated with small size (Acs & Audretsh, 1988; Julien, 1993; Lefebvre & Lefebvre, 1993; Riding, 1993). However, the controversy on the impact of size on diffusion of innovation has been further complicated by the mixed results of the studies investigating the relationship between size as an influential factor and diffusion of innovation (Aiken, et al., 1980; Blau & McKinley, 1979; Booth & Giacobbe, 1998; Damanpour, 1992; Dewar & Dutton, 1986; Hage, 1980; Krumwiede, 1998; Libby & Waterhouse, 1996). Shedding light on this controversy, this paper examines the relationship between business size and the diffusion of both technological innovation and activity based costing (ABC) through a longitudinal study in a single industry.